AC Milan’s financial recovery is continuing and that may be the precursor to a sale by owners Elliott Management, according to a report.
Calcio e Finanza report how Milan should end the financial year of 2021-22 with a loss of €50-60m, which shows that the recovery process that began two seasons ago when the losses were over three times as much is beginning to bear fruit.
Just yesterday the Milan management were able to speak relatively calmly in a hearing with UEFA on the topic of Financial Fair Play and while it is true that Milan are still making losses, it is equally true that the restrictive measures of the pandemic deprived them of revenue.
Milan have something which other top clubs in Italy do not have: a favourable debt situation. Elliott have practically eliminated financial debts (and only current ones remain) so that means that if an offer were to come to buy the company, Elliott would pocket the full amount of the transaction.
For a fund that by its nature invests in companies, heals them and then resells them at a higher price, this could be quite tempting. Elliott have so far invested over €700m in the Rossoneri and given the size and history of the club – and its prospects for the future – they could easily be valued even €1bn.
It must be noted that when investment funds measure the profitability of an operation, they do not look so much at the mere difference between the sale amount and the total of what was previously invested in that company, but they use an index called IRR (Internal Rate of Return).
This calculation takes into account the time duration in which the capital has remained committed in such a deal and how much this has yielded comparing it to operations in which that same money could have been invested alternatively.
Rumours of a sale have returned and Calcio e Finanza believe that there is something in a sale to North American subjects for a value of over a billion, but they were told that the Elliott fund have no intention of selling unless an irrefutable offer comes in.